Toronto-Dominion Bank

TELUS CORP., $31.97, Toronto symbol T, gained 3% this week in response to media reports that U.S.-based Verizon Communications (New York symbol VZ) may postpone its plan to enter Canada’s wireless market. Verizon is a recommendation of Wall Street Stock Forecaster, our newsletter that focuses on U.S. stocks. Verizon is reportedly interested in buying two smaller Canadian wireless carriers, Mobilicity and Wind Mobile, and bidding on new wireless frequencies, or spectrum. For technical reasons, Verizon may prefer to buy the new spectrum at an auction to be held in January 2014 before acquiring the two companies. Telus gets 53% of its revenue and 67% of its earnings from wireless services. That makes it particularly vulnerable to new competition from Verizon. Telus’s stock will likely remain volatile until Verizon’s intentions become clearer....

Exchange-traded funds (ETFs) are set up to mirror the performance of a stock-market index or subindex. They hold a more-or-less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index.

ETFs trade on stock exchanges, just like stocks....

AIMIA INC. $15.80 (Toronto symbol AIM; TSINetwork Rating: Extra Risk) (514-205-7315; www.aimia.com; Shares outstanding: 172.5 million; Market cap: $2.7 billion; Dividend yield: 4.3%) has finalized its deal for TD Bank to become the primary credit card issuer for Aeroplan, Aimia’s main loyalty program.

TD and Aimia are also negotiating a new agreement with Canadian Imperial Bank of Commerce, which has been Aimia’s banking partner in the Aeroplan program for the past 22 years.

This agreement would let CIBC sell around half of its existing Aeroplan accounts to TD. That would cut the risk of these clients switching to other loyalty plans or banks.
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POTASH CORP. OF SASKATCHEWAN, $30.04, Toronto symbol POT, fell 21% this week following news that Russian potash producer OAO Uralkali will exit its marketing joint venture with Belarusian potash producer Belaruskali. That’s because Belaruskali continues to sell some of its potash outside this partnership, which accounts for about 42% of global potash sales. Uralkali now plans to increase production and sell its potash directly to customers in China. That could put more pressure on potash prices, which have suffered in the past year due to rising supplies. In the second quarter of 2013, Potash Corp. sold its potash for an average of $356 U.S. a tonne, down 17.8% from $433 a year earlier. Potash Corp. owns a third of Canpotex, a marketing joint venture that sells potash to customers outside Canada and the U.S. Canpotex accounts for 25% of global potash sales. Agrium (see below) and Mosaic Co. (New York symbol MOS) each own a third of Canpotex....

AIMIA INC., $15.35, symbol AIM on Toronto, rose as high as $16.63 this week after the Canadian Competition Tribunal dismissed a complaint that Visa Canada and MasterCard impose anti-competitive rules on merchants. Merchants want to place surcharges on consumers’ credit card purchases to offset fees they pay to Visa and MasterCard. Credit card companies and the banks that issue the cards currently split these fees, which range from 1.5% to 3%. The merchants also wanted to be able to choose not to accept premium credit cards, which charge higher fees. The current rules, set by credit card issuers, prohibit merchants from doing either of these things. Visa and MasterCard currently process over 90% of credit card transactions in Canada....

Income Streams III Corp equity dividend shares, $7.28, symbol STQ.E on Toronto; (Units outstanding: 1.4 million; Market cap: $10.2 million; www.quadravest.com), is a split-share company with two types of shares: equity dividend (symbol STQ.E on Toronto) and capital yield (symbol STQ on Toronto). Split-share companies typically issue two classes of shares. Usually the capital shares get all or most of the capital gains and losses, and the preferred shares (or equity dividend shares in the case of Income Streams III Corp) get most of the dividend income. In the case of Income Streams III Corp, the equity dividend shares receive a fixed monthly dividend of $0.0875 a share ($1.05 annually). That gives them a 14.4% yield....

AIMIA INC. $15.12 (Toronto symbol AIM; TSINetwork Rating: Extra Risk) (514-205-7315; www.aimia.com; Shares outstanding: 172.5 million; Market cap: $2.6 billion; Dividend yield: 4.5%) owns and operates Aeroplan, Canada’s largest loyalty program, with over 4.6 million members....

AIMIA INC. $15.12 (Toronto symbol AIM; TSINetwork Rating: Extra Risk) (514-205-7315; www.aimia.com; Shares outstanding: 172.5 million; Market cap: $2.6 billion; Dividend yield: 4.5%) owns and operates Aeroplan, Canada’s largest loyalty program, with over 4.6 million members. It also owns Nectar, the U.K.’s biggest loyalty program. In addition, Aimia has interests in Air Miles Middle East and Nectar Italia, as well as Club Premier, the leading loyalty program in Mexico.

In the three months ended March 31, 2013, Aimia’s revenue rose 7.4%, to $609.5 million from $567.7 million a year earlier. Excluding one-time items, earnings per share fell 12.9%, to $0.27 from $0.31. The earnings decline was due to an increase in the company’s cost per mile, mostly because its expenses rose as it expanded its operations.

TD Bank has just agreed to become the main credit card issuer for Aeroplan. Under a new 10-year deal that will begin January 1, 2014, TD will launch new credit cards under the Aeroplan banner, including cards for frequent flyers and small businesses. TD will also pay Aimia $100 million at the start of the deal and commit to buying a minimum number of Aeroplan miles from Aimia for the first three years. In addition, the partners will spend a total of $140 million in the first four years to promote these new cards and rewards.
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BLACKBERRY INC., $11.08, Toronto symbol BB, fell 26% on Friday after the company reported lower-than-expected earnings. In its 2014 first quarter, which ended June 1, 2013, BlackBerry shipped 6.8 million smartphones, down 12.8% from 7.8 million a year ago. The latest quarter’s shipments included 2.7 million of its new, higher-priced BlackBerry 10 models, which fell short of the consensus estimate of 3.3 million. BlackBerry also lost $84 million, or $0.16 a share (all amounts except share price in U.S. dollars). Still, that’s a big improvement over the $510 million, or $0.97 a share, it lost a year earlier....

AIMIA INC., $15.74, symbol AIM on Toronto, rose over 13% this week after TD Bank agreed to become the primary credit card issuer for Aeroplan, Aimia’s main loyalty program. TD is a recommendation of The Successful Investor, our newsletter that focuses on conservative Canadian investing. Aeroplan is Canada’s largest loyalty program, with over 4.6 million members who collect Aeroplan miles from participating companies. Members can exchange their miles for flights, car rentals, hotel rooms and merchandise. Under this new 10-year deal, which would begin January 1, 2014, TD will launch new credit cards under the Aeroplan banner, including cards for frequent flyers and small businesses....